The Advantages of Water Carriage: Scale Economies and Shipping Technology, c. 1870–2000

Adam Smith was one of the first to emphasize the superiority of water transport for the carriage of goods. Had he lived long enough to see the rapid development of railways in the mid-nineteenth century he might have moderated his views slightly. However, the transition from sail to steam shipping, which gained momentum in the 1870s, produced a new leap forward for water transport: between 1880 and the First World War, transport costs in coastal shipping seem to have declined almost 40 per cent faster than on British railways.1 Similar observations have also been made for the period 1960–1990, and we may, indeed, conclude that ‘the advantages of water carriage’ have increased even in the longer term.2 Adam Smith’s example suggests that labour productivity in coastal shipping outpaced that in road transport by the ratio fourteen to one. In the beginning of the third millennium, the overall cost efficiency (price per ton-mile) of short-sea shipping seems to be some 25 times higher than that of long-trader trucking.3 Thus even after the late nineteenth century, there have been other technical ‘revolutions’ leading to a continuous, more or less regular, growth of transport efficiency in both ocean and coastal shipping. A macro-level proof is the fact that the global merchant tonnage grew about sixtyfold in 150 years, while the respective growth of output — the physical volume of cargo carried — grew at least twice as much.4